Global Investing

Top fund firms lose $16 trln in 2008

October 5, 2009

Watson Wyatt tells us the world’s largest fund managers lost $16 trillion of assets in 2008 as the worst of the global financial crisis took its toll on the top 500 global fund firms.  The fall in assets is the largest since Watson Wyatt’s research began in 1996 and doesn’t even include the dog days of early 2009 when no one knew quite when the flood would abate. 

Indeed, the survey to end-2008 is a wee bit limited, for all its completeness. A lot has changed in the asset management world since then.  Not least, the giant deal which brought BlackRock and Barclays Global Investors together to create the world’s largest money manager with assets of $2.8 trillion. Watson Wyatt’s survey ranks BGI as the world’s largest fund firm with $1.5 trillion.

Perhaps most pertinently though, the survey highlights in some detail an unprecented slump in passive assets during the year, shrinking by more than 25 percent to $4.5 trillion. Last in, first out it seems, as that has been followed by a 2009 marked by a swift and unapologetic return to the low fees of index investment after the shock of the credit crisis left active managers scratching their heads with the rest of us.

Perhaps it’s this trend which leads Carl Hess, Watson Wyatt’s global head of investment consulting, to believe that even after the strong market recoveries since March this year, the 2009 outlook for earnings and revenues in the sector remain “poor”.

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